Commerzbank is testing AI to write analysts reports

Commerzbank is experimenting with artificial intelligence technology that automatically generates sports reports to see if it can write basic analyst notes, as Mifid II forces banks across the world to trim research costs.

The German bank is working on the project with Retresco, a content automation company in which it invested two years ago through its fintech incubator unit. The project is still at an early stage and could take years to produce reports that banks would be happy to send to their clients, but the notion of AI replacing human research analysts is already attracting attention from senior bankers.

“There’s definitely work that can be done, parts of the [research] process that can be enhanced by algos and AI tools,” the head of one investment bank told the Financial Times, describing earnings reports as something that “should be robo-written”. The Europe head of another investment bank said research was an area that was rife for automation over time, while analysts at several other banks said their managers were experimenting with AI and automation applications.

This area is showing promise because “equity research reports reviewing quarterly earnings are structured in similar ways,” Michael Spitz, head of Commerzbank’s research and development unit Mainincubator told the Financial Times.

The technology, the FT said, is “already advanced enough to provide around 75% of what a human equity analyst would when writing an immediate report on quarterly earnings,” according to Spitz.

However, more complex reports are a long way away.

“If it is related to much more abstract cases, we feel that we are not there yet — that we can or maybe will ever replace the quality of a researcher,” Spitz said.

Banks are under fierce pressure to cut the costs of producing research on stocks and bonds following the implementation in January of European investor protections known as Mifid II.

The measures force investors to pay for research explicitly instead of bundling its costs into trading commissions. Some firms say their implied research revenue has fallen by as much as 30 per cent as a result.

Equity research on companies’ earnings is one of the areas that Retresco and Commerzbank have been focusing on after they analysed the bank’s warehouse of research reports and the data behind them.